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Innovation and Growth: A Schumpeterian Model of Innovation

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  • Haider A. Khan

    (GSIS University of Denver and CIRJE, University of Tokyo)

Abstract

Following Schumpeter we assume that innovation in specific firms, or groups of firms, can have economy-wide effects. Models based on this idea can be shown to have multiple equilibria. The idea of a positive feedback loop innovation system or POLIS is formalized by picking an appropriate sequence of equilibria over time. It is shown that POLIS has empirical relevance by applying the formal model to an actual economy. The 1997-98 financial crisis in many Asian countries, most notably South Korea, seemed to have reversed the conventional wisdom regarding the East Asian miracle". This paper applies the concept of a POLIS to the case of Taiwan to show that at least in this case, neither the view that the miracle was a mirage nor the view that the growth was a result of factor accumulation only is correct. Ultimately technological transformation - in particular the creation of a positive feedback loop innovation system is what makes the difference between sustained growth and gradual or sudden decline. Although various problems remain in both the real and the financial sectors, the successes of Taiwan in building the preconditions for an innovation system are worth examining. Upon careful examination of Taiwan's system of innovation within the above Schumpeterian model it is found that Taiwan has a fighting chance of building a POLIS in the near future. An interesting feature of the Taiwan POLIS is the modular organizational architecture of some of the high technology firms in Hsinchu science-based industrial park and other centers.

Suggested Citation

  • Haider A. Khan, 2002. "Innovation and Growth: A Schumpeterian Model of Innovation," CIRJE F-Series CIRJE-F-150, CIRJE, Faculty of Economics, University of Tokyo.
    • Handle: RePEc:tky:fseres:2002cf150
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    References listed on IDEAS

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    Cited by:

    1. Khan, Haider A., 2011. "Lessons from Korean development experience," MPRA Paper 39387, University Library of Munich, Germany.
    2. Khan, Haider, 2013. "Industrialization and Development Strategies in the 21st Century: Towards Sustainable Innovation Systems," MPRA Paper 50168, University Library of Munich, Germany.
    3. Khan, Haider, 2024. "Ecological Crisis and the Global South Internationalist Ecosocialism : A Strategy for Comprehensive Sustainable Non-capitalist Development in the Global South," MPRA Paper 119639, University Library of Munich, Germany.
    4. Khan, Haider, 2024. "Women’s Socially Embedded Capabilities and Development: A Theory-based Empirical Investigation," MPRA Paper 119908, University Library of Munich, Germany.
    5. Khan, Haider, 2024. "Africa as Part of a New Non-neocolonial Global South: A Strategy for African Development beyond the East Asian Model in the 21st Century : Integrating Markets and the Enabling Developmental State," MPRA Paper 120309, University Library of Munich, Germany.
    6. Khan, Haider, 2013. "Bangladesh: Towards a Non-partisan Search for a Pro-people National Political Economic Strategy during Crisis," MPRA Paper 49518, University Library of Munich, Germany.
    7. Khan, Haider, 2024. "Development Orders and Disorders: Real Competition in Complex Global Capitalist System, China’s Ambiguous Case, and the Need for Democratic Socialism in the 21st Century," MPRA Paper 119640, University Library of Munich, Germany.
    8. Khan, Haider, 2024. "Japanese Aid and Economic Development of Bangladesh," MPRA Paper 119877, University Library of Munich, Germany.
    9. Khan, Haider, 2023. "Towards a New Non-aligned Movement(NNAM) and a New International Economic Order:A Strategy for Comprehensive Non-capitalist Development in the 21st Century," MPRA Paper 117143, University Library of Munich, Germany.
    10. Khan, Haider A., 2011. "Bangladesh: National Political Econmic Strategies in Perilous Times," MPRA Paper 40121, University Library of Munich, Germany.
    11. Khan, Haider, 2023. "Towards a General Complex Systems Model of Economic Sanctions with Some Results Outlining Consequences of Sanctions on the Russian Economy and the World," MPRA Paper 116806, University Library of Munich, Germany.
    12. Khan, Haider, 2023. "China’s Augmented National Innovation System (ANIS) and the Future: A Nonlinear Complex Systems Model with Application to Semiconductors and AI," MPRA Paper 116836, University Library of Munich, Germany.
    13. Khan, Haider, 2023. "Geoeconomics, China, Fourth Industrial Revolution and the Future," MPRA Paper 117362, University Library of Munich, Germany.
    14. Keun Lee & John A. Mathews, 2010. "From Washington Consensus to BeST Consensus for world development," Asian-Pacific Economic Literature, The Crawford School, The Australian National University, vol. 24(1), pages 86-103, May.
    15. Khan, Haider A, 2010. "Development Strategies: Lessons from the Experiences of South Korea, Malaysia, Thailand and Vietnam," WIDER Working Paper Series 010, World Institute for Development Economic Research (UNU-WIDER).
    16. Khan, Haider & Patomäki, Heikki, 2013. "A reconstructive critique of IPE and GPE from a critical scientific realist perspective: An alternative Keynesian-Kaleckian approach," MPRA Paper 49517, University Library of Munich, Germany.

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